SWEDEN Law and Practice Contributed by: Johannes Wårdman and Erik Frykenholt, CMS Wistrand
the operator be undertaking customer due diligence measures in relation to a transaction or business rela - tionship with the legal entity. 4. Legal Developments 4.1 Notable Recent Decisions or Statutory Developments Apart from the recent introduction of the FDI regime in Sweden in 2024, there have not been any substantial legal developments specifically relevant to JVs. As most JV disputes are subject to arbitration and such arbitration proceedings are generally confiden - tial, there have not been any significant recent court decisions relating specifically to JV matters or busi - ness collaborations. 5. Negotiating the Terms 5.1 Preliminary Negotiation Instruments and Practices The negotiation process and instruments at this stage are always tailored to meet the needs and require - ments of the potential JV partners and vary greatly from case to case. In the most straightforward pro - cess, where the deal value is usually on the low end or if the parties are already familiar with each other, there is no need for pre-agreement documents. In such sim - ple cases, the partners start negotiating and drafting the shareholders’ agreement or JV agreement directly. If the co-operation and potential partners require a more structured process, it is common for the parties to agree on a letter of intent (LOI) setting forth the framework of the negotiation and a mutual non-dis - closure agreement (NDA) to be able to freely discuss sensitive information and synergies. The LOI usually contains both binding provisions, such as exclusiv - ity and confidentiality undertakings, and non-binding provisions, such as timelines, general terms and con - ditions for the JV agreement and structure of the JV organisation. Other pre-agreement actions and documents may be needed depending on the business and specific
requests from the parties, such as clearances from relevant authorities, restructuring actions prior to the
JV or ancillary documentation. 5.2 Disclosure Obligations
Whether the partners to the JV are required to disclose the JV entity to the public depends on whether any of the partners are a listed public company. There are no regulatory provisions requiring the for - mation of a JV company to be disclosed to the public if the partners are either individuals or private limited liability companies. The partners to the JV are, how - ever, under certain circumstances, obliged to report the creation of the JV entity to the SCA if the partners exceed certain revenue thresholds. Approval from the SCA of the formation of the JV entity must be obtained before the company is set up. See 3.4 Competition Law and Antitrust for more details. Besides the potential obligation to register the ulti - mate beneficial owners of the JV, there are no require - ments to notify and register the ownership of shares with the public authorities. The ownership of shares in a private limited liability company is registered in the share register of the company, managed and kept by the board of directors. 5.3 Conditions Precedent, Material Adverse Change and Force Majeure What specific conditions need to be met prior to the setting up of the JV is highly dependent on what the JV is intended for and the needs of the parties. It is common that a JV is formed to own or manage assets from the JV partners in order to create syner - gies. In such cases, the setting up of the JV will be dependent on such assets being transferred to the JV or the partners agreeing on, for example, manage - ment or service agreements with the JV. The formation of the JV could also be dependent on the partners receiving financing from an external creditor on sat - isfactory terms or approvals from local authorities to engage in the JV. All such potential requirements are usually conditions which need to be fulfilled before entering into a JV agreement.
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